Summary
Insolvency Law Case Summary
- Course
- Institution
- Book
Summary of important Insolvency Law Cases dealt with in MRL3701
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
MRL3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 - DUE 30 August 2024 ; 100% TRUSTED Complete, trusted solutions and explanations.
-
MRL3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 13 September 2024
-
MRL3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 13 September 2024
Seller
Follow
StuddyScene
Reviews received
Content preview
CASES SUMMARYInsolvency Law
MRL301-M
Magnum Financial Holdings (Pty) Ltd (in liquidation) v Summerly NO 1984 (1) SA 160(W)
Facts A company in liquidation had a claim for R 1,6 million, which was due and payable,
against the Summerly Trust who:
i) committed an act of insolvency in terms of Section 8(g) of the Insolvency Act; and
ii) was insolvent in any event.
This company proceeded with an application for a provisional sequestration order on
an urgent basis as it was to the advantage of the creditors. There had been sufficient
service of the papers on the trustee of the trust and the one provisional liquidator of
the applicant company had locus standi to apply for the provisional sequestration of
the trust estate. Furthermore, the necessary security bond had been duly lodged and
also annexed to the court papers.
Legal question Could a trust be regarded as a debtor in the usual sense of the word for purposes of
Section 2 of the Insolvency Act and, therefore, be sequestrated?
Finding The provisional sequestration order was granted.
Ratio decidendi As no South African case seemed to have dealt with this issue, the court relied on the
Southern Rhodesian case of Ex parte Milton where the voluntary surrender of the
estate of an administrative trust created by contract was approved. The trust fell within
the definition of a “debtor” and could be described as a debtor in the usual sense of
the word. Through its trustee, the trust could borrow money and, as a property owner,
be liable for rates and taxes. Creditors would be paid only from the trust's property
and the trustees incurred no personal liability. A concursus creditorum could not be
established by sequestrating the estates of the donor of the trust property, the trust
beneficiaries, or the trustee. The Rhodesian court also relied on a South African
decision concerning a club which owned property apart from its members, who were
not liable for its debts beyond the amount of their subscriptions. Such a club was a
debtor within the meaning of the Insolvency Act, and its estate could therefore be
sequestrated.
The court further gave the common-law meaning of "any body corporate" as an
association of individuals capable of holding property and of suing and being sued in
its corporate name, or a universitas having the capacity to acquire certain rights apart
from the rights of the individuals which form it, and having perpetual succession (ie,
continuous existence) and held that a trust could not be regarded as a body corporate.
The court held that a trust is not a juristic person and so it may not be liquidated in
terms of the Companies Act.
A trust, however, qualified as a debtor in the ordinary sense of the word as it can
clearly possess assets and incur liabilities, which are evident from the founding
affidavit, and therefore a trust estate may indeed be sequestrated.
Ex parte Henning 1981 (3) SA 843 (O)
Facts In an application for the surrender of the applicant’s estate, it appeared that his wife, to
whom he was married out of community of property, made a monthly contribution from
her salary to pay his creditors. A creditor opposed based on the following grounds:
i) that the application didn’t comply with the requirements of Section 6(1) because the
applicant's assets didn’t cover costs of sequestration payable from the free residue;
ii) that the respondent would be much better off if the application for voluntary
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller StuddyScene. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.78. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53068 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now